April 13, 2007: How to prioritize your home-buying negotiation in the current Phoenix real estate market
Real estate transactions are all about negotiation. Long before a house goes on the market, the seller and the listing agent will negotiate fees and terms. My take is that buyers should effect the same type of negotiation with their agents before looking at houses, but this rarely happens.
Once the buyer finds the ideal home, the Realtors negotiate price, closing dates and costs, repairs, etc. The Purchase Contract can be looked at as an agreement to agree -- subject to further negotiations.
So how should you negotiate? Your Realtor is going to effect the direct negotiations with the other Realtor, but both of them are agents of their principals. They are bound by the law to obey your lawful instructions to the letter. The style of the dickering may be your Realtor's, but the substance will be all yours.
Some people have the idea that negotiation is about hurting or taking advantage of the other party. They will ruthlessly go for the jugular at every opportunity, regarding a parley as a failure if they don't see the other party as the clear loser in the deal. This seems to me to invite future rancor and recalcitrance, should we need a favor at the last minute in order to close the deal.
At the other extreme are those pushovers who are so afraid to stand up for themselves that they give away the store -- and throw in the parking lot, too. In our current buyer's market, sellers can be very reluctant to brook confrontation, and this may not be a bad idea. Too often, buyers are so in love with a house that they are afraid that they'll lose it if they issue the smallest peep in protest.
So how should you negotiate? Gently but firmly, calmly and rationally, naming your reasons for every objection you raise. You should distinguish deal-killers from matters-of-importance from gimmes and quibbles, and you should negotiate them in that order. There's no point in sweating the small stuff if there is no movement on the big issues.
In theory we negotiate on paper, but specific issues are often taken up by telephone, then detailed and ratified by contract addenda. This is language I like a lot: "That's not working for us, and here's why." The "here's why" is important because, if our objection is justified, we take away the counter objection. If necessary, I can say, "How would your clients want this to play out if the tables were turned. If they were paying full price for a home, are you saying they wouldn't want it to be in turn-key condition?"
We negotiate calmly, because things will not move once the acrimony starts. And if it turns out we're up against one of those people who cannot bargain fairly, who simply must try to come out on top in every parley -- then we have a decision to make. We will probably cancel and move on, but it could be that we will want the transaction to close so badly that we're willing to deal with a jerk.
Just remember: Real estate transactions are financial, not personal. And, whether they are nasty or nice, we will probably never see the other parties again after close of escrow.
Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.
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